AT&T and The Chernin Group announced today that they are creating a join endeavor with a $500 million dollar investment to create a video streaming service similar to Netflix. In their announcement they point to the cord cutting movement as one of the main reason behind this move. This move will a services along side its tradition cable service called Uvers. This move clearly shows that AT&T internal data show declining subscribers quicker than they expected.
“The strategic goal of this initiative will be to invest in advertising and subscription VOD channels as well as streaming services,” AT&T said in their press release.
AT&T has a long history with the TV industry even before their Uvers offering they had a traditional cable network that was purchased by what is now Comcast. AT&T is clearly hoping their history and existing contracts with content creators will help them build a services to rival Netflix.
“Combining our expertise in network infrastructure, mobile, broadband and video with The Chernin Group’s management and expertise in content, distribution, and monetization models in online video creates the opportunity for us to develop a compelling offering in the OTT space,” John Stankey, chief strategy officer at AT&T.
Even with a $500 million dollar investment AT&T is still dwarfed by Netflix with its $1 billion dollars of revenue in just the first quarter 2014. AT&T dose have the ability to try and run Netflix into the ground by out spending them but they will need to make a much larger investment if they have any hope of beating Netflix solely by outspending them.
Competition is a positive influence in any market but many cord cutters will be concerned that AT&T will throttle other services in a effort to push their uses into AT&T’s new service. With the death of Net Neutrality and the recent Comcast Netflix deal this seams more likely now than it did even a year ago.